BANI SAHA,KOLKATA vs. ITO, WD-30(1), KOLKATA, KOLKATA

The assessee in the present case is an individual, who is engaged in the business of handling and forwarding of coal. The return of income for the year under consideration was filed by her on 31.10.2006 declaring total income of Rs.2,32,400/-. During the course of assessment proceedings, notices issued by the AO under section 143(2) and 142(1) remained uncomplied with by the assessee, as noted by the AO in the assessment order. He, therefore, proceeded to complete the assessment ex parte to the best of his judgment under section 144 of the Act. In the assessment so completed vide order dated 30.12.2008, the total income of the assessee from the business of handling and forwarding of coal was estimated by the AO by applying the net profit 2 Bani Saha Assessment Year: 2006-07 rate of 8%, which worked out to Rs.10,65,450/-. For making this estimate the AO placed reliance on the provisions of section 44AD of the Act observing that the business of the assessee was of contractual nature.

On appeal, the ld. CIT(A) upheld the order passed by the AO under section 144 of the Act and confirmed the estimation of income of the assessee made therein relying again on the provisions of section 44AD of the Act. Aggrieved by the order of the ld. CIT(A), the assessee has preferred this appeal before the Tribunal.

I have heard the arguments of both the sides and perused the relevant material on record. As rightly submitted by the ld. Counsel for the assessee, the assessee has not been in the business of civil construction and the turnover of her business in the year under consideration being more than one crore, the provisions of section 44AD are not applicable in her case and the reliance of the authorities below on the said provision to estimate the income of the assessee from the business of handling and forwarding of coal by applying the net profit rate of 8% is clearly misplaced. Moreover, a perusal of the assessment order passed under section 144 by the AO shows that he has not given the relevant details of issue of notices under section 143(2) and 142(1) during the course of assessment proceedings and service of such notices on the assessee. In the absence of such details, I find it difficult to ascertain as to whether proper and sufficient opportunity of hearing was given to the assessee or not during the course of assessment proceedings and this position is not disputed or controverted even by the ld. DR. Having considered all these facts of the case, I consider it fair and proper and in the interest of justice to send the 3 Bani Saha Assessment Year: 2006-07 matter back to the AO in order to give one more opportunity of being heard to the assessee. Accordingly, the impugned order of the ld. CIT(A) is set aside and the matter is restored to the file of the AO with a direction to make the assessment afresh after giving proper and sufficient opportunity of being heard to the assessee. The assessee is also directed to extend full cooperation to the AO in order to enable him to complete the assessment afresh expeditiously without any further delay.

In the result, the appeal of the assessee is treated as allowed for statistical purpose.